The state government has decided not to extend an ongoing scheme aimed at helping traders settle their sales tax arrears pending for years. The government has been able to rake in only Rs 5 crore ever since the six-month-long scheme, titled Samadhan, was introduced on November 1 as against a target of Rs 500 crore despite waiver of interest, penalty and a part of tax.

"We have made efforts to convince the trading community through various initiatives. We hope the momentum will pick up after February," a government official said. The first Samadhan scheme introduced in 1999 fetched the state exchequer Rs 19.87 crore, while Rs 169.69 crore was collected last year under the scheme. Three such schemes implemented in 2002, 2006 and 2008 earned the government only Rs 151 crore.

With the state facing a debt of Rs 1.01 lakh crore, it was looking at ways to generate revenue and enacted the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2011 to collect a large amount of tax, penalty and interest pending for years. The plan was to help the cash-strapped exchequer earn a sizeable sum by giving traders relief on penalty and waiving 60% of tax payable. According to the commercial taxes department, the pending sales tax arrears over the last two decades amount to Rs 9,944 crore.